Managing the Long Life of Industrial Equipment

Industrial equipment lasts a long time—the average age of current equipment in the U.S. is a decade, though some equipment might work for 20-30 years. During that time, it gets customized, modified and modernized, presenting a challenge of tracking those changes to avoid a repetition of previous design errors, as well as to ensure maximum reuse or recycling of parts.

A number of innovations are helping companies manage the task. Product lifecycle management (PLM) systems track equipment from cradle to grave, including the bill of materials (BOM), engineering attributes and other parameters. The Industrial Internet of Things (IIoT), which deploys sensors in equipment, can enhance PLM by gathering data about how the machinery has been used. And new paradigms for ownership are shifting the risk.

“You may have very little documentation, or everything necessary—even a 3D product model,” says Justin Rose, Chicago-based partner at the Boston Consulting Group.

When you have a 3D product model, you can update it in the virtual world, manage design changes, manage performance and design conditions.”

For example, the model will note whether the equipment has changed owners or locations, when and how it has been serviced, the rate at which it consumes energy and other inputs.

While 3D models are still in “early stages of adoption, companies that have very complex pieces of equipment, or expensive capital equipment, are investing the time to build a 3D product model,” Mr. Rose says. “For other companies, if they’re going to refurbish equipment, or if it’s a complex million-dollar-plus product, they might build a 3D product model to support execution of that service.”

But like any tool, the key to realizing value from such models is to get all the individual stakeholders to maintain it year after year. “Sometimes you see more turnover, or an aging workforce, and not having a 3D product model or not using it creates a real risk to the viability of the enterprise going forward,” Mr. Rose says.

The IIoT offers new ways to track how industrial equipment is used—from vibrations to heat to environmental conditions and more. “It’s possible to provide services such as preventive maintenance or monitoring energy consumption,” says Daniele Cerri, research fellow at the Polytechnic University of Milan, in Italy.

However, companies don’t always make the most of the data. “Technology enables a large amount of data collection, but providers of industrial equipment often don’t have a business vision of how to use this data,” he says, and cites an example of one company that produces movement equipment with embedded sensors. “They do it to copy their competitors, but they don’t know how to use that data on their products.”

In addition, the data may be stored in different software in different databases. “People may use too much time to find where the data are located,” Mr. Cerri says, adding that digital platforms that gather and analyze the data can help manage the information and deliver real insights.

Makers of industrial equipment and their customers sometimes have conflicting interests, Mr. Cerri says, because customers “are jealous of their information and don’t want to share it with providers, even if they can obtain more effectiveness and efficiency during the utilization of the equipment.”

Standardization also aids with reuse or recycling of parts. Often machine bases can be reused “because they’re quite standardized,” he says. “It’s good cost savings and good environmental impact savings.”

Standardization and modular design also can help with another trend: industrial-equipment makers retaining ownership of the equipment itself and selling use as a service, billed hourly, for example. Modularization would help them easily adapt machinery to individual customer needs and make upgrades.

Companies already following this model use advanced analysis, 3D modeling and simulation tools to predict when it needs maintenance, especially because failure in fast-moving machines can cause much more damage beyond the failed part itself, BCG’s Mr. Rose says.

“If equipment goes down, they have to make the customer whole somehow,” he says. “It’s a strong motivation for them to keep it maintained and up and running.”